Startup or Scale Up — Successful Equity Crowdfunding Campaigns
27. January 2016
Author: Claire Millard
A successful crowdfunding campaign brings together the hard business sense of pitching private equity, and the emotional engagement of retail sales.
You're talking with people who may be sophisticated VC veterans, but might equally be first time investors. And you want them to part with their cash, for no immediate return and often for a business or product that has not even been fully launched yet. It's asking a lot, and understanding the psychology of the crowd is crucial. Get it right, and you’ll nail both the art and the science of crowdfunding — increasing your chances of finding not only the investment you need to get started, but the right investors to make your business fly.
If you launch your campaign with Fundwise, you will be fully guided every step of the way. Here's our outline of the essential features of a successful crowdfunding campaign:
Three is Not a Crowd
What makes a crowd? It takes momentum for a crowd to come together. As a potential investor, if you know your friends, family, acquaintances or even just a whole bunch of people have already invested, that is encouraging. Positive momentum builds and snowballs.
This process starts long before you launch the campaign. Grow and engage your audience, with a focus on getting not only enough people, but also the right people involved. Hooking some influential supporters can quickly turn a measly few into a crowd.
Get Your Story Straight
While you’re growing your fan base, you need to iron out your narrative. Your crowdfunding campaign is about telling a story every bit as much as it is selling your product or service.
Successful crowdfunding campaigns have a well-developed story. Describe both the problem you have identified and the reasons that you are uniquely able to address it. Support this with a well-crafted campaign profile and outreach material, quality pictures and video to ensure that the style matches the substance. If you launch a campaign with Fundwise, our campaign manager will help you through the process.
This Time It’s Personal
Trust is built upon personal connections and intimacy. Share yourself, and backers are far more likely to engage with you. Investors want to see where you came from, where you are going and – crucially – why you need them. They are investing in you and your team as much as they are the product you’re offering, so be prepared for your campaign to get personal.
Potential investors might be the girl next door or a wealthy VC. Both will make decisions based on the capability, believability and enthusiasm they see in a prospect.
Demonstrate your capability by telling potential investors about your track record. Show how your education and experience have brought you to this point.
Believability comes from a coherent story, coupled with a transparent approach to investors.
And enthusiasm? If you’re not enthusiastic about your business, then you’re in the wrong place. Tell investors why the specific combination of passion and skill within your team will make your project successful.
If crafting a perfect personal story is the art, then this is the science. Be transparent about your business and the opportunity you have identified. Make sure your figures are presented in a way that allows readers to actually make a decision based on them.
You can not baffle potential investors with business b.s. Break down the numbers to digestible levels, explaining what the funding will do to transform your operation. Remember, nothing makes potential investors hightail it and run like fuzzy info.
Validate and Grow
One advantage of equity crowdfunding is the opportunity to validate product and market fit, while building an audience and securing funding. There is, however, a balance to be struck. Validate the product but show your thought process, logic and plans. No investor will back a half-baked idea. If your natural style is to jump out the window and build a plane on the way down, be prepared to be over-prepared.
Sulev Nõmmann, from Siidrikoda craft cider house, was recently funded successfully to 155% with Fundwise, raising 93 200€ for his company. His advice?
”Start considering crowdfunding options when your business is already up and running — not too early. The crowd will invest into people running existing businesses, not into ‘bright ideas’."
Do you have a functional business looking to grow? Or a strong and well-thought-out idea ready to launch, and a real willingness to take and use feedback? An equity crowdfunding campaign might be right for you.
Fundwise is a platform designed for founders and investors. We can help you navigate the choppy waters of crowdfunding. From crafting your profile and pitch, to generating PR and media leads, decoding the legalese and answering those tough investor questions. Learn more about how Fundwise can help you kickstart your business and generate the growth you need.